- 13 -
had previously lent to Simco, and therefore that such proceeds
were not income to him.6
In general, amounts received as repayment of a loan are not
included in income. See Kudo v. Commissioner, T.C. Memo. 1998-
404. “Whether * * * an advance made by a shareholder to a
corporation creates a true debtor-creditor relationship is a
factual question to be decided based on all relevant facts and
circumstances.” Haag v. Commissioner, 88 T.C. 604, 615 (1987),
affd. without published opinion 855 F.2d 855 (8th Cir. 1988).
Whether or not a loan exists depends on the intent of the parties
at the time of the transaction. See Haber v. Commissioner, 52
T.C. 255, 266 (1969), affd. per curiam 422 F.2d 198 (5th Cir.
1970). By the same token, whether or not the transfer of funds
constitutes the repayment of a loan depends on the intent of the
parties at the time of the transfer. Where the transaction
claimed to be a loan is between a corporation and a controlling
shareholder, the situation invites special scrutiny. See
6 Petitioners’ argument applies to the proceeds from scrap
metal sales retained by John during the latter half of his 1991
tax year, which the parties have stipulated totaled $33,870.
However, respondent determined that John had unreported income of
$34,731 for tax year 1991 and maintained that position on brief.
Petitioners have not addressed this $861 discrepancy, and we
accordingly treat this difference as either conceded by
petitioners or decided adversely to them, due to our rejection
hereinafter of the claim that any portion of the scrap metal
proceeds received by John in 1991 constituted the repayment by
Simco of a loan to it by John.
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